SWEF: Full Year Results for the Year Ended 31 December 2024

Starwood European Real Estate Finance Limited

Full Year Results for the Year Ended 31 December 2024

Starwood European Real Estate Finance Limited (the “Company”) and its subsidiaries (“SEREF” or the “Group”), a leading investor managing a diverse portfolio of high-quality real estate debt investments in the UK and Europe and now pursuing an orderly realisation and return of capital to shareholders, is pleased to announce Full Year Results for the year ended 31 December 2024.

Highlights for the period, 12 months ended 31 December 2024

• Asset realisation progress – during the year a total of £109 million, 42 per cent of the Group’s 31 December 2023 total funded loan portfolio, has been repaid, comprising the repayment of five loans:
  • £42.6 million, Hotel, Scotland
  • €32.8 million, Three Shopping Centres, Spain
  • €22.9 million, Hotel, Dublin
  • €12.2 million, Shopping Centre, Spain
  • £8.8 million Hotel and Office, Northern Ireland
• Significant cash returns to Shareholders totalled £125.0 million during the year (in addition to the £85.0 million returned to Shareholders in 2023) from the proceeds of loan repayments and cash held at the beginning of the year across the instalments:
  • February 2024: c.£20 million
  • March 2024: c.£25 million
  • July 2024: c.£80 million
• Dividends continue uninterrupted totalling 5.5 pence per Ordinary share.
• Strong cash generation – based on current forecasts, the portfolio is expected to continue to support an annual dividend payment of 5.5 pence per Ordinary share.
• Income stability – all contractual loan interest and scheduled amortisation payments have once again been paid in full.
• Inflation protection – 84 per cent of the portfolio is contracted at floating interest rates (with floors).
• Borrowers of loans classified as Stage 1 and Stage 2 remain adequately capitalised and are expected to continue to pay loan interest and capital repayments in line with contractual obligations.
• Solid portfolio performance – the loan book is performing broadly in line with expectations with its defensive qualities reflected in the Group’s continued NAV stability in a challenging macro-economic environment (save for the impact of the impairment provision made in relation to the Office Portfolio, Ireland loan).

• 81% share price total return since inception in December 2012.

• The average remaining loan term of the portfolio is 1.2 years, with the final loan being contractually due to repay by the end of 2026 – as of 31 December 2024 (subject to any permitted extensions which may be granted in the best interests of the shareholders).

• Significant equity cushion – the weighted average Loan to Value for the portfolio as of 31 December 2024 is 64 per cent. With the exception of the Office Portfolio, Ireland loan, a significant equity cushion continues to exist to the Company’s loan basis.

Post period-end Highlights

• One significant repayment concerning a £47.3 million loan (Hotels, UK) that was repaid in full.
• An additional £46.0 million of cash was returned to Shareholders in February 2025.

Portfolio Statistics

As at 31 December 2024, the portfolio was invested in line with the Group’s investment policy. The key portfolio statistics are summarised below:
 

*Alternative performance measure

John Whittle, Chairman of the Company commented:

“During the year 42 per cent of the Group’s 31 December 2023 funded portfolio was repaid across five investments. Further post-period end, this positive momentum has been maintained with a significant £47.3 million loan repayment. All of these positive results have enabled us to return £125 million to shareholders in three instalments during 2024 and £46 million in 2025 to date.

“Save for the impact of the provision made in relation to the Office Portfolio, Ireland loan, I’m pleased to report that the loan book is performing broadly in line with expectations and that borrowers remain adequately capitalised.

“With only six investments now remaining in the portfolio, I look forward to keeping shareholders informed on our progress to realise the remaining investments and continue returning capital promptly to shareholders while sustaining regular quarterly dividend payments.”

For further information, please contact:
 
Apex Fund and Corporate Services (Guernsey) Limited as Company Secretary  +44 203 5303 630
Duke Le Prevost
 
Starwood Capital  +44 (0) 20 7016 3655
Duncan MacPherson
 
Jefferies International Limited  +44 (0) 20 7029 8000
Gaudi Le Roux
Harry Randall
Ollie Nott
 
Burson Buchanan  +44 (0) 20 7466 5000
Helen Tarbet  +44 (0) 07788 528143
Henry Wilson
       
Notes:
Starwood European Real Estate Finance Limited is an investment company listed on the main market of the London Stock Exchange with an investment objective to conduct an orderly realisation of the assets of the Group.  www.starwoodeuropeanfinance.com.
 
The Group's assets are managed by Starwood European Finance Partners Limited, an indirect wholly owned subsidiary of Starwood Capital Group.

Starwood European Real Estate Finance

Annual Report and Audited Consolidated Financial Statements

for the year ended 31 December 2024

Overview

Financial Highlights

(1) Further explanation and definitions of the calculation is contained in the section “Alternative Performance Measures” at the end of this financial report.

(2) Source: Morningstar. The Morningstar calculations include dividends in the year in which the payments are made to shareholders. This differs to the approach taken by the Company in this table which is to show dividends in the year in relation to which they are declared (see footnotes (3) and (4) below).

The differences between dividends paid and declared are shown below:

(3) During 2024 the Company declared a dividend of 1.375 pence per Ordinary Share in relation to each of the first three quarters of 2024 with the fourth quarter dividend of 1.375 pence per Ordinary Share declaration being made in January 2025. These four dividends declared all related to income earned in 2024 and are therefore included within the 5.5 pence per Ordinary Share dividend shown in the table above for the year ended 31 December 2024.             

(4) During 2023 the Company declared a dividend of 1.375 pence per Ordinary Share in relation to each of the first three quarters. The Company also declared a dividend of 1.875 pence per Ordinary Share in January 2024. These four dividends declared all related to income earned in 2023 and are therefore included within the 6.0 pence per Ordinary Share dividend shown in the table above for the year ended 31 December 2023.

SHARE PRICE PERFORMANCE

As of 31 December 2024, the NAV was 100.49 pence per Ordinary Share (2023: 104.35 pence) and the share price was 91.8 pence (2023: 90.4 pence).

PREMIUM / DISCOUNT CUM-FAIR

The Company’s share price has been volatile since the market turbulence caused by Covid-19 in March 2020. The volatility has been driven primarily by market conditions and trading flows rather than a change in the Company’s performance.

Objective and Investment Policy 

INTRODUCTION

Starwood European Real Estate Finance Limited (the “Company”) was established in November 2012 to provide its shareholders with regular dividends and an attractive total return while limiting downside risk, through the origination, execution, acquisition and servicing of a diversified portfolio of real estate debt investments in the UK and the European Union’s internal market.

The Company, together with its subsidiaries Starfin Public Holdco 1 Limited, Starfin Public Holdco 2 Limited, Starfin Lux S.à.r.l, Starfin Lux 3 S.à.r.l, and Starfin Lux 4 S.à.r.l, (collectively the “Group”), has provided a regular dividend to shareholders whilst preserving capital by limiting downside risk.

On 31 October 2022, the Company announced, that following a review of the Company’s strategy and advice sought from its advisers, the Board intended to recommend to shareholders that the investment objective and policy of the Company were amended such that the Board can pursue a strategy of orderly realisation and the return of capital over time to shareholders (the “Proposed Orderly Realisation”). If approved by the shareholders, the Company would seek to return cash to shareholders in an orderly manner as soon as reasonably practicable following the repayment of loans, while retaining sufficient working capital for ongoing operations and the funding of committed but currently unfunded loan commitments.

On 28 December 2022, a Circular relating to the Proposed Orderly Realisation and containing a Notice of Extraordinary General Meeting (EGM) was published. The Circular set out details of, and sought shareholder approval for, certain proposals (the “Proposals”). The Proposals were:

(a) a change to the Company’s Investment Policy to reflect the fact that the Company will cease making any new investments and will pursue a realisation strategy of the remaining assets in the Company’s portfolio; and

(b) adoption of new articles which provide for the periodic Compulsory Redemption of the Company’s Shares at the discretion of the Directors to allow cash to be returned to shareholders following the full or partial realisation of assets.